Xi has few good options after Trumps ultimatum on G-20 meeting

By now, Xi Jinping is used to Donald Trumps tariff threats. But the U.S. presidents latest ultimatum is personal, and the Chinese leaders response could have far-reaching consequences for his political future.

Trump on Monday said he could impose tariffs “much higher than 25%” on $300 billion in Chinese goods if Xi doesnt meet him at the upcoming Group of 20 summit in Japan. Chinas foreign ministry — which usually refuses to provide details of meetings until the very last minute — declined Tuesday to say whether the meeting would take place.

The brinkmanship puts Xi — Chinas strongest leader in decades — in perhaps the toughest spot of his six-year presidency. If Xi caves to Trumps threats, he risks looking weak at home. If he declines the meeting, he must accept the economic costs that come with Trump possibly extending the trade conflict through the 2020 presidential elections.

“Whether they meet or not, none of the possible scenarios are good for President Xi or the economy in the long run,” said Zhang Jian, an associate professor at Peking University. “You dont have a good choice which can meet the needs of the Chinese economy or Mr. Xis political calculations.”

Prodded by hawks in Washington to take a “whole of government” approach toward China, Trump may make it harder for Xi to compromise at the negotiating table. The U.S. administrations efforts to sell arms to Taiwan and criticize Chinas mass-detention of ethnic Uighurs in the remote far west of the country are fueling nationalist fears in Beijing that the U.S. wants to weaken and contain its biggest rival.

The G-20 in late June is one of the last chances for Trump and Xi to head off a conflict between the worlds biggest economies that appears to be worsening by the day. Besides tit-for-tat tariff increases, the U.S. has blacklisted Huawei Technologies Co. and threatened other major Chinese tech companies, while Beijing is drawing up a list of “unreliable entities” that could face restrictions.

At the last meeting between Trump and Xi at the G-20 in Argentina last year, they emerged with a 90-day truce that opened space for more talks. Those collapsed last month after Trump accused China of reneging on parts of the agreement, leading to an increase in tariffs and stronger actions against Huawei.

The arguments for Xi to meet Trump mostly revolve around the need to prevent greater economic damage. Chinas imports tumbled in May, underscoring domestic economic weakness that could hurt global growth. For China, 25% tariffs could result in a drag of nearly 1% on growth by 2021 if they remain in place, according to Bloomberg Economics.

Stalled TalksWhats more, Chinese officials increasingly feel like working-level talks arent leading anywhere. One Chinese trade official said discussions with the U.S. had reached a point where no further progress could be made without the intervention of the two presidents.

And besides, Trump has a track record of escalating tensions dramatically before cutting a deal in a personal meeting.

“The best approach for China is to not reply to Trumps words, but wait a few days and then announce that Xi will attend the G-20,” said Wang Peng, associate research fellow at the Chongyang Institute for Financial Studies at Renmin University of China. “Meeting Trump is risky for everybody, but Xi can manage and control that risk.”

Xi, however, also has reasons to avoid a meeting with Trump. China has repeatedly said it wont be bullied or pressured into negotiating, and Xi could look as if hes giving Trump a win by meeting him after an explicit threat.

Since talks collapsed, Chinas state media has ramped up nationalist rhetoric. The Communist Partys flagship Peoples Daily newspaper ran a commentary last month saying China will never make decisions that “give up power and humiliate the country,” a phrase used in school textbooks to describe the treaties China signed mostly in the 19th century.